Portugal's Cavaco Silva Is Re-elected as President as Bailout Threat Looms
Portuguese President Anibal Cavaco Silva, a former premier and economist, won election to a second term as the country struggles to avoid following Greece and Ireland in requesting a bailout.
Cavaco Silva, backed by the opposition Social Democratic party, yesterday grabbed more than the 50 percent of the vote needed to win outright and avoid a runoff. Manuel Alegre, a candidate supported by the Socialist Party of Prime Minister Jose Socrates, was second, with 19.75 percent of the vote, according to the government’s election results website.
“I will be a reference of confidence, of stability and of solidarity,” Cavaco Silva told supporters last night in Lisbon. Cavaco Silva, 71, won 52.94 percent of the vote.
The election comes as Socrates carries out the deepest budget cuts in three decades to convince investors the nation can narrow its budget gap further and tame debt. Cavaco Silva, also a former finance minister, has backed those efforts that so far have failed to rein in borrowing costs and ease concern the country may become the third country in the euro region to request a European Union-led bailout.
“We are living in exceptional times that are the result of complex financial problems,” Miguel Morgado, a professor at Catholic University’s Political Studies Institute in Lisbon, said before the vote. “It’s natural to seek a head of state that feels comfortable with these issues.”
The yield on Portugal’s 10-year bond was at 6.88 percent as of Jan. 21, 371 basis points more than comparable German debt and more than three times the level of a year ago.
While the post of president is largely ceremonial, its holder can influence the political debate by speaking out on government policies, and the president holds the power to dissolve parliament in certain cases, which Cavaco Silva’s predecessor did in 2004.
Portugal’s gross domestic product will shrink 1.3 percent in 2011 as consumer demand weakens, the Bank of Portugal said on Jan. 11. The government, which predicts 0.2 percent growth this year, is cutting the wage bill by 5 percent for some public workers, freezing hiring and raising the sales tax by 2 percentage points to help narrow a deficit that amounted to 9.3 percent of GDP in 2009, the fourth-biggest in the region after Ireland, Greece and Spain.
Portugal is trying to avoid outside support as it seeks to sell about 20 billion euros ($27 billion) in bonds this year to finance its deficit and meet redemptions. The country set a target for a budget deficit of 4.6 percent of GDP in 2011, and aims to reach the EU limit of 3 percent in 2012.